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TYPES OF BUSINESSES

TYPES OF BUSINESSES. SOLE PROPRIETORSHIP, PARTNERSHIPS, CORPORATIONS. FIRST THING. THINK ABOUT PROJECTS FOR SCHOOL…DO YOU LIKE WORKING IN GROUPS OR INDIVIDUALLY? WHAT ARE THE CHALLENGES AND POSITIVES OF WORKING INDIVIDUALLY AND IN GROUPS?. FIRST THING #2.

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TYPES OF BUSINESSES

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  1. TYPES OF BUSINESSES SOLE PROPRIETORSHIP, PARTNERSHIPS, CORPORATIONS

  2. FIRST THING • THINK ABOUT PROJECTS FOR SCHOOL…DO YOU LIKE WORKING IN GROUPS OR INDIVIDUALLY? • WHAT ARE THE CHALLENGES AND POSITIVES OF WORKING INDIVIDUALLY AND IN GROUPS?

  3. FIRST THING #2 • S.P. MOST COMMON FORM OF BUSINESS OWNERSHIP • 16 MILLION SOLE PROPRIETORSHIPS IN USA • MANY FAIL, MANY LAUNCH EVERY DAY • PLAY SIGNIFICANT ROLE IN US ECONOMY • ENABLES MANY PEOPLE TO PARTICIPATE DIRECTLY IN ECONOMY • BARRIERS ARE LOW/POSSIBILITIES FOR EXPANSION ARE GREAT • 1. 16,154,000 • 2. SERVICES

  4. FIRST THING #3 • CORP. RAISE INVESTMENT CAPITAL FROM BANKS, BONDS, STOCKS • SELLING STOCK IS VERY POPULAR • CORP GET MONEY/STOCK PURCHASERS BECOME PART OWNERS • 1. BOTH • 2. COMMON STOCK OWNERSHIP

  5. STARTING A BUSINESS: WHAT YOU NEED… • ENTREPRENUER: PERSON WHO ORGANIZES, MANAGES AND ASSUMES THE RISKS OF A BUSINESS • DECIDE ON BUSINESS ORGANIZATION • LEARN ABOUT LAWS REGULATIONS AND TAX CODES

  6. HELP FROM GOV’T FOR SMALL BUSINESSES • FINANCIAL STARTUPS FOR NEW BUSINESSES • SMALL BUSINESS INCUBATORS: GENERATE JOB CREATION AND ECONOMIC GROWTH • SMALL BUSINESS ADMINISTRATION: SEE WEBSITE: WWW.SBA.GOV/STARTING/INDEXFAQS.HTML

  7. ELEMENTS OF BUSINESS OPERATIONS • 1. EXPENSES: BUY INVENTORY, OTHER SUPPLY ITEMS…WAGES • 2. ADVERTISING • 3. RECORD KEEPING: TRACKING EXPENSES • 4. RISK: BALANCE RISKS VS ADVANTAGES OF BEING IN BUSINESS

  8. OWNING YOUR OWN BUSINESS • LIST 3 ADVANTAGES TO OWNING YOUR OWN BUSINESS • LIST 3 DISADVANTAGES TO OWNING YOUR OWN BUSINESS

  9. SOLE PROPRIETORSHIP ADVANTAGES DISADVANTAGES OWNER KEEPS ALL PROFITS DECISIONS CAN BE MADE QUICKLY TAXES LOW OWN BOSS EASY TO GET CREDIT UNLIMITED LIABILITY HUGE TIME DEMANDS MUST DEPEND ON OWN AND BORROWED FUNDS

  10. THE PARTNERSHIP • LIST 3 ADVANTAGES OF HAVING A PARTNER IN BUSINESS • LIST 3 DISADVANTAGES OF HAVING A PARTNER IN BUSINESS

  11. PARTNERSHIP ADVANTAGES DISADVANTAGES LOSSES ARE SHARED TAXES USUALLY LOW COMBINE FUNDS OF SEVERAL PARTNERS PROFITS ARE SHARED DECISION MAKING CAN BE SLOW MAY HAVE TROUBLE BORROWING MONEY MUST BE REORGANIZED IF LOSE ONE PARTNER

  12. LIMITED PARTNERSHIPS • PARTNERS ARE NOTE EQUAL • GENERAL PARTNER ASSUMES MANAGEMENT DUTIES…OTHER PARTNERS ARE LIMITED PARTNERS • LIMITED PARTNERS HAVE NO LIABILITY FOR LOSSES • NO SAY IN BUSINESS

  13. CORPORATIONS • WHAT IS THE DIFFERENCE BETWEEN A PARTNERSHIP, A SOLE PROPRIETORSHIP AND A CORPORATION?

  14. CORPORATIONS ADVANTAGES DISADVANTAGES OWNER’S TIME NOT NEEDED FOR MAKING MONEY LIMITED LIABILITY RESPONSIBILITIES SHARED AMONG MANY SATISFACTION FROM OWNERSHIP EASY TO RAISE FUNDS UNLIMITED LIFETIME SLOW DECISION MAKING HIGHER TAXES SHAREHOLDERS HAVE LITTLE SAY IN RUNNING OF COMPANY

  15. CORPORATIONS • MUST FILE FOR PERMISSION W/GOVT TO OBTAIN CHARTER • CHARTER SPECIFIES NUMBER OF SHARES OF STOCK • SHARES ARE CERTIFICATES OF OWNERSHIP • SOLD TO STOCKHOLDERS

  16. INTRO TO STOCK MARKET • BUY LOW SELL HIGH • FALLS 7X FASTER THAN IT RISES • BULL VS BEAR…DON’T FORGET THE PIGS • THE MARKET IS FICKLE AND IS AN INDICATOR OF THE FUTURE

  17. STOCKHOLDERS • MONEY FROM STOCKHOLDERS USED TO SET UP/EXPAND CORPORATION • IF SUCCESSFUL CORPORATIONS MAY ISSUE DIVIDENDS • CHECK REPRESENTING A PORTION OF CORPORATE EARNINGS TO EACH STOCKHOLDER

  18. COMMON STOCK • BASIC OWNERSHIP OF A CORPORATION • USUALLY RECIEVES ONE VOTE FOR EACH SHARE OF STOCK OWNED

  19. PREFERRED STOCK • NONVOTING OWNERSHIP OF CORPORATION • DO NOT HAVE RIGHT TO ELECT REPS TO BOARD OF DIRECTORS

  20. STOCK RETURNS • MAKE MONEY IN 2 WAYS • 1. DIVIDENDS • 2. SELLING STOCK FOR MORE THAN IT WAS PAID FOR

  21. CAPITAL GAINS AND LOSSES • PERSON BUYS STOCK AT $20 AND SELLS IT FOR $30. • PROFIT OF $10 IS CALLED A CAPITAL GAIN • IF A PERSON SELLS AT LOWER COST----CAPITAL LOSS

  22. BONDS • CERTIFICATE ISSUED BY A COMPANY/GOVT IN EXCHANGE FOR BORROWED MONEY • BONDS MATURES OVER TIME • DOES NOT MAKE BONDHOLDER PART OWNER

  23. SAVINGS BONDS • WAY FOR GOVT TO BORROW $ • SAFE FORM OF INVESTMENT • PERSON BUYING SAVINGS BOND PAYS ½ THE AMOUNT • BOND INCREASES EVERY 6 MONTHS UNTIL IT MATURES TO FULL VALUE

  24. BROKERS • PERSON WHO ACTS AS GO BETWEEN FOR BUYERS AND SELLERS OF STOCKS

  25. STOCK EXCHANGES • LARGEST STOCK MARKET IS NYSE… • REGIONAL EXCHANGES AND INTERNATIONAL EXCHANGES • TO BE LISTED A CORPORATION MUST BE IN GOOD STANDING • LARGEST, MOST PROFITABLE CORPORATIONS IN THE COUNTRY

  26. OVER THE COUNTER MARKETS • ELECTRONIC MARKETPLACE FOR STOCKS NOT LISTED ON ORGANIZED EXCHANGES • LARGEST ARE QUOTED ON NATIONAL ASSOCIATION OF SECURITIES DEALERS AUTOMATED QUOTATIONS (NASDAQ) • MERGED WITH AMERICAN STOCK EXCHANGE IN 1998 • INVESTOR WOULD USE INTERNET/CALL BROKER TO START TRADING

  27. MUTUAL FUNDS • INVESTMENT COMPANY POOLS MONEY OF MAY INDIVIDUALS TO BUY STOCKS • LOSSES IN ONE AREA, MAY BE MADE UP IN ANOTHER • FIDELITY…401K • STOCKS ARE DIVERSIFIED

  28. HEALTH OF STOCKS • DOW JONES INDUSTRIAL AVERAGE: TRACKS STOCK OF30 LARGE AMERICAN COMPANIES TO MEASURE WELL BEING OF WHOLE MARKET • S AND P 500: USES PRICE CHANGES OF 500 STOCKS AS AN INDICATOR

  29. GOVT REGULATIONS • STOCK MARKET HEAVILY REGULATED • SEC ADMINISTERS ALL SECURITIES LAWS • INVESTIGATES DEALINGS • REQUIRES ALL ESSENTIAL INFO BE MADE AVAILABLE TO BUYERS

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